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A deal to develop gene-editing therapies with Intellia Therapeutics could lead to breakthroughs in treating liver disease.

Earlier this week, Regeneron Pharmaceuticals(NASDAQ:REGN) inked a collaboration deal with the privately held Intellia Therapeutics that could have moonshot implications in various disease indications. The agreement merges Regeneron Pharmaceuticals existing expertise in genetic research with Intellia Therapeutics preclinical research into a new genetic editing technique known as CRISPR-Cas9 that could revolutionize patient treatment. Let's take a closer look at this deal and what it may mean to these companies.

IMAGE SOURCE: REGENERON PHARMACEUTICALS.

First, a bit of backgroundRegeneron Pharmaceuticals is a fast-growing, commercial-stage biotechnology company that already markets the multibillion-dollar blockbuster Eylea for use in wet age-related macular degeneration and Praluent, a drug it co-developed with Sanofi SA(NYSE:SNY) that can lower cholesterol levels in tough-to-treat patients. Also, the FDA could potentially approve two additional Regeneron drugs that target autoimmune diseases within the next year and a half.

Intellia Therapeutics is an early-stage biotech company that hopes to develop novel medicine using a gene-editing technique that is based on the immune system of bacteria.

When bacteria is attacked by a virus, it memorizes a bit of the attacking virus' DNA into the genetic code of its immune system. These DNA bits are stored in repeating spaces within its genetic code called clustered regularly interspaced short palindromic repeats, or CRISPR. When the invader reappears, bacteria recognize it and use CRISPR-associated proteins, or Cas, to act like scissors and cut up the invading virus DNA to prevent it from replicating.

This defense system's simplicity, precision, and effectiveness have Intellia and its peers believing that they can mimic it to create therapies that use a guide-RNA to knock out, repair, or insert specific genetic sequences to treat gene-related diseases.

Detailing the dealRegeneron Pharmaceuticals is giving Intellia Therapeutics $75 million in up-front cash and it has also agreed to buy $50 million in Intellia Therapeutics stock during Intellia's next round of private equity fundraising.

In return, Regeneron Pharmaceuticals gains a license to develop up to 10 CRISPR-Cas therapies, including five therapies that will target liver diseases and up to five other therapies that will address non-liver targets.

The first therapy that the two companies will work on will be one that addresses transthyretin amyloidosis, a life-threatening disease that causes abnormal protein deposits known as amyloids to build up in the body's organs and tissues.

The companies haven't indicated what other liver disease targets they might go after, but investors might find it interesting to know that Intellia Therapeutics Chief Technology Officer David Morrissey was formerly Senior Director of Antiviral Therapeutics at Sirna Therapeutics. In that role, he led efforts to develop a hepatitis C drug.

IMAGE SOURCE: INTELLIA THERAPEUTICS.

Competitive marketAlthough there are currently limited treatment options available to patients with transthyretin amyloidosis, work is underway by Alnylam Pharmaceuticals(NASDAQ:ALNY) and Sanofi on patisiran, an RNA interference therapy that could make its way the FDA for approval as early as 2017.

Alnylam's patisiran attempts to battle back against transthyretin amyloidosis by silencing messenger RNA responsible for creating proteins associated with familial amyloid polyneuropathy, a form of transtheyretin amyloidosis that represents about 10,000 patients worldwide.

In early stage studies, patisiran reduced the impact of the disease in patients and results from a fully enrolled phase 3 study of patisiran are expected next year.

Alnylam and Sanofi are also developing a second drug, revusiran, to address familial amyloid cardiomyopathy, the version of transthyretin amyloidosis that impacts cardiac function in 40,000 patients globally. A phase 3 study of revusiran is enrolling patients and is expected to have data available in late 2018.

Looking aheadAlnylam and Sanofi's headstart could allow them to have their transthyretin amyloidosis medications on the market long before Regeneron Pharmaceuticals and Intellia Therapeutics, but if Alnylam's approach slows disease progression and Regeneron Pharmaceuticals and Intellia Therapeutics' approach cures or reverses it, then this target could still be a big commercial success for the two companies.

Perhaps, more important to investors, however, is that Regeneron Pharmaceuticals and Intellia Therapeutics efforts in transthyretin amyloidosis could inform research into more common liver diseases that could open up a much bigger commercial opportunity for the companies.

Admittedly, this research is in the uber-early stages of development, so anything could go wrong from here. But, given how intriguing this approach is, investors may want to keep tabs on the progress of these two companies; especially since their efforts could lead to game-changing advances in patient treatment someday.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Alnylam Pharmaceuticals. The Motley Fool recommends Regeneron Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Author

Todd has been helping buy side portfolio managers as an independent researcher for over a decade. In 2003, Todd founded E.B. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Todd has provided insight to a variety of publications, including SmartMoney, Barron's, and CNN/fn.
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